Sustaining psychological contracts during organizational change

Abstract

Organizational change is expected to undermine the quality of psychological contracts. A large amount of research has shown that change has detrimental effects on employment relationships, especially when major restructuring and the downsizing of staff lead to a breach of the psychological contract. However, a smaller number of studies have presented certain types of change and supporting practices that foster psychological contracts. This systematic review of published research summarizes practices that are used to support psychological contracts during organizational change. Effective practices pertain to organizational justice, effective communication, participation, leadership, management practices for planning change and human resource management practices. The benefits of these practices are assessed in the context of four types of changes (minor and major changes, mergers, and downsizing) because these types of changes affect psychological contracts differently and determine the range of practices that can be used. This analysis contributes to the literature by providing guidance for future research with regard to identifying factors that pertain to the quality of the change with respect to psychological contracts. It highlights lacunae in the extant research and ultimately helps support organizational practice to plan and manage changes in a sustainable way.